Is my state return taxable?

[beta.test]

Hi all,

I was on a J1 visa in 2017 for an internship (California) and filed my 1040NR where I claimed the money withheld by California in my itemized deductions.

In 2018 I was a resident of Canada for the whole year and I received an $1800 refund from California with 1099-G with no withholdings. I didn't file any tax returns because I believed this refund is not taxable.

Recently, I realized that this income might be taxable but still not sure. Reasons I believed that it was not taxable:

1- Personal exemption will remove any taxable income (which I realized they suspended in 2018!).

2- Canadians don't pay taxes on the first $10000 anyway according to the treaty (I found that state refund may not count for this?)

3- When I filled my CRA tax in 2017 I did not count the $1800 difference towards my foreign tax credit because the CRA doesn't count overpayments so I might be sort of double taxed.

Do I owe any taxes? and if I don't should I file a tax return anyway?

Thanks.

[nelsona]

State refunds that were included on your 1040 or 1040NR are taxable the next year on the 1040 or 1040NR. Since 1040NR has no standard deduction, you may have tp report this and figure tax.

These refunds are not taxable in Canada, unless you used the tax as a credit, in which case you would need to amend the return to reduce the credit by the refunded tax.

2. your statement that Cdns don't pay tax on 1st 10K from US is completely false, but has no bearing on this. But get that idea out of your head.

[beta.test]

thanks for the reply nelsona, I guess I better handle this situation ASAP.

For the 10K thing, I saw people referring to Article XV of the tax treaty, but wasn't sure what applies to it.